Do people really buy foreclosures unseen?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
knightrider
Posts: 331
Joined: Fri Jun 06, 2014 11:20 am

Do people really buy foreclosures unseen?

Post by knightrider » Tue Jul 25, 2017 7:31 pm

On any foreclosure listing it says:

NO VIEWINGS of this property. Please DO NOT DISTURB the occupant. "As is" cash only sale with no contingencies or inspections. Buyer will be responsible for obtaining possession of the property upon closing.

Surely there must be some way of viewing the property. Inside could be a complete mess or nice. I suppose one can try sending a letter to the residents asking if they would allow a showing ? However, this will not work if place is empty. If it is empty, why can't they post some pictures of the inside?

Carefreeap
Posts: 2422
Joined: Tue Jan 13, 2015 7:36 pm
Location: SF Bay Area

Re: Do people really buy foreclosures unseen?

Post by Carefreeap » Tue Jul 25, 2017 7:46 pm

The lender is likely in the process of evicting the tenants. It is a highly adversarial situation. They may be the former owners or tenants that didn't know about the foreclosure.

There's nothing illegal about knocking on the door or leaving a note but be pleasantly surprised if you get cooperation. In other words why would they cooperate?

You're right; the place could be a mess and you may "own" an eviction process.

You pays your money and you takes your chances.

AlohaJoe
Posts: 3927
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: Do people really buy foreclosures unseen?

Post by AlohaJoe » Tue Jul 25, 2017 7:50 pm

A friend did this many years ago. They went and looked in the windows one time when no one was home. Ended up with the winning bid. Everything worked out fine for them.

knightrider
Posts: 331
Joined: Fri Jun 06, 2014 11:20 am

Re: Do people really buy foreclosures unseen?

Post by knightrider » Tue Jul 25, 2017 7:52 pm

Carefreeap wrote:The lender is likely in the process of evicting the tenants. It is a highly adversarial situation. They may be the former owners or tenants that didn't know about the foreclosure.

There's nothing illegal about knocking on the door or leaving a note but be pleasantly surprised if you get cooperation. In other words why would they cooperate?

You're right; the place could be a mess and you may "own" an eviction process.

You pays your money and you takes your chances.
What you are describing sounds like the worse-case scenario. I wonder what the statistics show about this? My guess is 90+% of foreclosures are no different than ordinary sales. Think about it. If you default on your loan is it in your best interests to trash the place and get forcibly evicted? I would think 90% of folks just want out without making their life worse.

I come up with this 90% because I've bought 5 REO properties in Chicago downtown. These were already on the MLS and were vacant. I was able to inspect and everything, but it was still sold as-is. I had zero issues with any of them.

tim1999
Posts: 3514
Joined: Tue Dec 16, 2008 7:16 am

Re: Do people really buy foreclosures unseen?

Post by tim1999 » Wed Jul 26, 2017 6:19 am

knightrider wrote:On any foreclosure listing it says:

NO VIEWINGS of this property. Please DO NOT DISTURB the occupant. "As is" cash only sale with no contingencies or inspections. Buyer will be responsible for obtaining possession of the property upon closing.

Surely there must be some way of viewing the property. Inside could be a complete mess or nice. I suppose one can try sending a letter to the residents asking if they would allow a showing ? However, this will not work if place is empty. If it is empty, why can't they post some pictures of the inside?
There was recently a foreclosure on the market in my area with this exact language on the listing. Exterior only photos, etc. It was in a desirable neighborhood and priced very well, somebody apparently snapped it up within 2 weeks, so it does happen. Personally I'd never risk it unless I assumed the worst inside and paid a price based upon that.

investingdad
Posts: 1440
Joined: Fri Mar 15, 2013 10:41 pm

Re: Do people really buy foreclosures unseen?

Post by investingdad » Wed Jul 26, 2017 7:26 am

There's a community about a mile from us where the homes sold for up to 500k, LCOL area otherwise.

One home last year was a foreclosure. It was TRASHED on the inside. Counter tops removed, toilets removed, walls ripped up, you name it.

Just a data point...

User avatar
jfn111
Posts: 955
Joined: Fri Nov 08, 2013 10:42 pm
Location: Minnesota

Re: Do people really buy foreclosures unseen?

Post by jfn111 » Wed Jul 26, 2017 7:34 am

I work with a number of investors and we avoid these properties like the plague. Often the bank wants to hand off their problems to an investor and let them try to evict the occupants.
Sure, they can be good deals when everything goes smoothly but, I have also read about evictions that took 5 years because of local laws and appeals by the occupants.
I tell my clients "These are not for the faint of heart".

knightrider
Posts: 331
Joined: Fri Jun 06, 2014 11:20 am

Re: Do people really buy foreclosures unseen?

Post by knightrider » Wed Jul 26, 2017 7:42 am

jfn111 wrote:I work with a number of investors and we avoid these properties like the plague. Often the bank wants to hand off their problems to an investor and let them try to evict the occupants.
Sure, they can be good deals when everything goes smoothly but, I have also read about evictions that took 5 years because of local laws and appeals by the occupants.
I tell my clients "These are not for the faint of heart".
In high cost of living areas, such deals may be worth the trouble/risk. What is the process to find the foreclosures? Is it just through sites like auction.com ? Or does one have to find the bank broker?

tigerdoc93
Posts: 136
Joined: Wed Oct 07, 2015 8:50 pm

Re: Do people really buy foreclosures unseen?

Post by tigerdoc93 » Wed Jul 26, 2017 8:08 am

Download HUD Homestore app and you can see foreclosures in your area. I look at it from time to time.

Ron
Posts: 6386
Joined: Fri Feb 23, 2007 7:46 pm

Re: Do people really buy foreclosures unseen?

Post by Ron » Wed Jul 26, 2017 8:15 am

Assuming a house has good bones, replacement of counter tops/toilets/etc. are just a minor cost of renovations if you're going to flip or even live in the house.

Over the lifetime of a home, these are items that are often things that are replaced/upgraded over many years. However, now you have to do it all at once. Assuming you can get the home at a deep discount that will allow you to have the upgrades/replacements done in a cost effective manner (you or a contractor), it still may make sense to buy the home, especially if it's located in a locale that is on the rise. Heck, we've been in our current home 23 years (built new per our specs) and we've replaced/upgraded a lot of the interior space/items in that time.

The problem as I see it is if the home has yet to be vacated at time of sale. IOW, the former owners/tenants are basically squatting in the home. That's a legal problem that may take a lot of time/$$$ to resolve and something that would keep me from placing a bid.

FWIW,

- Ron

User avatar
F150HD
Posts: 1705
Joined: Fri Sep 18, 2015 7:49 pm

Re: Do people really buy foreclosures unseen?

Post by F150HD » Wed Jul 26, 2017 8:34 am

Lord forbid the house contains (for example) asbestos (boiler comes to mind) and needs to be removed. That can get pricey.


investingdad wrote:There's a community about a mile from us where the homes sold for up to 500k, LCOL area otherwise.

One home last year was a foreclosure. It was TRASHED on the inside. Counter tops removed, toilets removed, walls ripped up, you name it.

Just a data point...
Guessing most flippers will remove most of that anyway when doing a remodel in an area like that (aside from the walls). Though if one is updating electric/plumbing the walls may need to be torn open anyway.

jbuzolich
Posts: 292
Joined: Tue Jun 24, 2014 9:52 pm

Re: Do people really buy foreclosures unseen?

Post by jbuzolich » Wed Jul 26, 2017 8:37 am

During the economic downturn many of the foreclosures in our area were completely trashed. Like others have posted, anything that might be usable somewhere else or sellable was pulled out. Countertops, cabinets, toilets, faucets, light fixtures, doors, copper pipe, copper wiring, all gone. We had just purchased our first home as new construction but continued to visit other properties. We made offers later on a couple foreclosed cabins up in the mountains that were in ok shape but never got accepted.

User avatar
jfn111
Posts: 955
Joined: Fri Nov 08, 2013 10:42 pm
Location: Minnesota

Re: Do people really buy foreclosures unseen?

Post by jfn111 » Wed Jul 26, 2017 9:41 am

knightrider wrote:
jfn111 wrote:I work with a number of investors and we avoid these properties like the plague. Often the bank wants to hand off their problems to an investor and let them try to evict the occupants.
Sure, they can be good deals when everything goes smoothly but, I have also read about evictions that took 5 years because of local laws and appeals by the occupants.
I tell my clients "These are not for the faint of heart".
In high cost of living areas, such deals may be worth the trouble/risk. What is the process to find the foreclosures? Is it just through sites like auction.com ? Or does one have to find the bank broker?
Auction.com and hubzu are 2 my clients use. Maybe this has been going on in other parts of the country but it's fairly new in MN. Most foreclosures were sold after the statutory redemption period was over and the house was empty. This intermediate sale, after the Sheriff's auction but during the redemption period, is just something I hadn't seen much of before.
Example for those that are asking "what are these guys talking about?"
https://www.hubzu.com/property/00071456 ... m-MN-55006

rkhusky
Posts: 5899
Joined: Thu Aug 18, 2011 8:09 pm

Re: Do people really buy foreclosures unseen?

Post by rkhusky » Wed Jul 26, 2017 9:45 am

We had a few foreclosures in our neighborhood. One across the street had one of the doors left open all winter and the basement flooded.

Carefreeap
Posts: 2422
Joined: Tue Jan 13, 2015 7:36 pm
Location: SF Bay Area

Re: Do people really buy foreclosures unseen?

Post by Carefreeap » Wed Jul 26, 2017 10:12 am

knightrider wrote:
Carefreeap wrote:The lender is likely in the process of evicting the tenants. It is a highly adversarial situation. They may be the former owners or tenants that didn't know about the foreclosure.

There's nothing illegal about knocking on the door or leaving a note but be pleasantly surprised if you get cooperation. In other words why would they cooperate?

You're right; the place could be a mess and you may "own" an eviction process.

You pays your money and you takes your chances.
What you are describing sounds like the worse-case scenario. I wonder what the statistics show about this? My guess is 90+% of foreclosures are no different than ordinary sales. Think about it. If you default on your loan is it in your best interests to trash the place and get forcibly evicted? I would think 90% of folks just want out without making their life worse.

I come up with this 90% because I've bought 5 REO properties in Chicago downtown. These were already on the MLS and were vacant. I was able to inspect and everything, but it was still sold as-is. I had zero issues with any of them.
You are trying to apply logic to a very emotional situation. People are losing their shelter and do not go quietly away. It's the mean bank's fault and they are going to get even. Their credit is trashed and in their mind have nothing more to lose.

One of the funnier/sad stories I heard from a title officer I worked with was an investor pretended to be some kind of health inspector and got into the house. He thought it was o.k. and successfully bid on the house during the sale on the courthouse steps.

After he acquired title he went back to the house and thought it looked odd. The former owner was gone so at least he didn't have to deal with an eviction but in addition to removing all the appliances and anything of value the former owner removed every single interior wall in the house. The house looked odd because the owner removed load bearing walls and the roof was sagging.

Carefreeap
Posts: 2422
Joined: Tue Jan 13, 2015 7:36 pm
Location: SF Bay Area

Re: Do people really buy foreclosures unseen?

Post by Carefreeap » Wed Jul 26, 2017 10:24 am

jfn111 wrote:
knightrider wrote:
jfn111 wrote:I work with a number of investors and we avoid these properties like the plague. Often the bank wants to hand off their problems to an investor and let them try to evict the occupants.
Sure, they can be good deals when everything goes smoothly but, I have also read about evictions that took 5 years because of local laws and appeals by the occupants.
I tell my clients "These are not for the faint of heart".
In high cost of living areas, such deals may be worth the trouble/risk. What is the process to find the foreclosures? Is it just through sites like auction.com ? Or does one have to find the bank broker?
Auction.com and hubzu are 2 my clients use. Maybe this has been going on in other parts of the country but it's fairly new in MN. Most foreclosures were sold after the statutory redemption period was over and the house was empty. This intermediate sale, after the Sheriff's auction but during the redemption period, is just something I hadn't seen much of before.
Example for those that are asking "what are these guys talking about?"
https://www.hubzu.com/property/00071456 ... m-MN-55006
Most of the West are Trust Deed states and therefore don't have a mortgage redemption period. CA has a minimum 60 day notice the new buyer of a foreclosure has to give to the occupant hence a lot of "cash for keys".

Personally I don't like it because I think that promotes more bad behavior on the part of tenants but I understand why people do it.

The only foreclosure I have ever purchased was doing a short sale of my deceased mother's condo to my husband and me. It took about 8 months to complete the transfer and was far more difficult than you can imagine. It was the summer of 2008 and in the early stages of the melt-down and I was dealing with a sub-prime lender. They were over-whelmed and I found out that not even a veteran Loss Mit supervisor knew the rules. Although I was successful I kept thinking about all those poor people who lost their homes who didn't need to. I can understand why someone would take out their frustrations on the house.

SimonJester
Posts: 1676
Joined: Tue Aug 16, 2011 12:39 pm

Re: Do people really buy foreclosures unseen?

Post by SimonJester » Wed Jul 26, 2017 4:27 pm

Carefreeap wrote: One of the funnier/sad stories I heard from a title officer I worked with was an investor pretended to be some kind of health inspector and got into the house. He thought it was o.k. and successfully bid on the house during the sale on the courthouse steps.

After he acquired title he went back to the house and thought it looked odd. The former owner was gone so at least he didn't have to deal with an eviction but in addition to removing all the appliances and anything of value the former owner removed every single interior wall in the house. The house looked odd because the owner removed load bearing walls and the roof was sagging.
Ouch... A coworkers sister and husband purchased a foreclosure like the ones mentioned here. After moving in they discovered it had been used as a meth lab and ended up having to pay high 5 to 6 figures to have the house torn down to the studs to re-mediate the problem.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

Engineer250
Posts: 1065
Joined: Wed Jun 22, 2016 1:41 pm

Re: Do people really buy foreclosures unseen?

Post by Engineer250 » Wed Jul 26, 2017 4:38 pm

Bought during the downturn. Every house we looked at was a foreclosure or bank owned property. So most were empty. One of the homes was a short sale and the family was there as we went through on a weekend including a little girl. Felt pretty weird to be sizing up their house as that little girl was about to lose her home.
Where the tides of fortune take us, no man can know.

letsgobobby
Posts: 11672
Joined: Fri Sep 18, 2009 1:10 am

Re: Do people really buy foreclosures unseen?

Post by letsgobobby » Wed Jul 26, 2017 11:45 pm

knightrider wrote:On any foreclosure listing it says:

NO VIEWINGS of this property. Please DO NOT DISTURB the occupant. "As is" cash only sale with no contingencies or inspections. Buyer will be responsible for obtaining possession of the property upon closing.

Surely there must be some way of viewing the property. Inside could be a complete mess or nice. I suppose one can try sending a letter to the residents asking if they would allow a showing ? However, this will not work if place is empty. If it is empty, why can't they post some pictures of the inside?
In a hot market, not only foreclosures are sold sight unseen. We just sold a house for above asking, sight unseen.

JGoneRiding
Posts: 1241
Joined: Tue Jul 15, 2014 3:26 pm

Re: Do people really buy foreclosures unseen?

Post by JGoneRiding » Thu Jul 27, 2017 9:32 pm

knightrider wrote:
jfn111 wrote:I work with a number of investors and we avoid these properties like the plague. Often the bank wants to hand off their problems to an investor and let them try to evict the occupants.
Sure, they can be good deals when everything goes smoothly but, I have also read about evictions that took 5 years because of local laws and appeals by the occupants.
I tell my clients "These are not for the faint of heart".
In high cost of living areas, such deals may be worth the trouble/risk. What is the process to find the foreclosures? Is it just through sites like auction.com ? Or does one have to find the bank broker?
A true foreclosure auction or tax auction is also cash only on closing bid. Basically you go with cahiers checks in increments

User avatar
patriciamgr2
Posts: 789
Joined: Mon Nov 19, 2007 3:06 pm

Re: Do people really buy foreclosures unseen?

Post by patriciamgr2 » Thu Jul 27, 2017 9:45 pm

REO (bank owned) deals are different from foreclosures where you need to evict the residents; I wouldn't expect the experience to be exactly comparable. In addition to all of the points raised above, I note that in warm climates in particular, mold is a real possibility. If a frig w/ icemaker was removed improperly, the water can drip down behind cabinets.

When the utilities get turned off, further damage can occur which doesn't show up until the water is turned on again. In my area, deliberate sabotage such as cement down plumbing was common in the bad old days. I have no idea if it's still an issue.

Good Luck.

pepperz
Posts: 237
Joined: Sun Jan 24, 2016 7:13 pm

Re: Do people really buy foreclosures unseen?

Post by pepperz » Fri Jul 28, 2017 6:06 am

Carefreeap wrote:There's nothing illegal about knocking on the door or leaving a note but be pleasantly surprised if you get cooperation. In other words why would they cooperate?
How about knocking on the door and offering $100 cash to whomever answers for a 5 minute walk-thru of the house?

Post Reply